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BUSINESS REVIEW SEPTEMBER 1959 Vol. 44, No.9 TRUSli DEPARTMENTS IN THE SOUTHWEST The development of the law of trusts and trustees dates back more than five centuries in English history alone; and, long before that, the rulers of ancient Rome and Egypt initiated legislation regulating the management of property held in trust. Notwithstanding the early origin and long evolution of the trust concept, however, the entrance of commercial banks into the trust field is a comparatively recent development. In this country the authority for national banks to act in fiduciary capacities dates only from 1913, although state banks in several states were given the right to perform trust functions somewhat earlier. It is not surprising that the early development of commercial bank trust functions was centered in the older and wealthier sections of the country - particularly the East - since concentrations of family wealth laid the original foundation for the emergence of important personal trust services. Moreover, the Nation's industrialization and the parallel growth of business corporations generated enlarged demands for corporate trust services, and these demands naturally were channeled into banks and trust companies located in the earliest industrial and financial centers. The growth of the trust function as an important adjunct of commercial banking in the Southwest was delayed by the predominantly agricultural nature of the regional economy; by the type of early industrial development; and, to some extent, by the lack of experience of most southwestern banks in the trust field. Corporations with branch operations in the Southwest RESERVE DALLAS, BANK TEXAS OF DALLAS This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) looked to trust departments in the areas where head offices were located, and many wealthy individuals maintained contacts with banks in eastern cities. As the significant forms of wealth broadened to include assets other than land and cattle and as the number and importance of local corporations increased, the demand for personal and corporate trust services expanded rapidly. Nevertheless, the tradition for trust business to gravitate to eastern cities persisted and, in fact, lingers today. Southwestern banks have made substantial progress in overcoming this tradition; yet, the volume of trust services performed by these banks still is not fully indicative of the type of economy which they serve. financial centers. For example, approximately 70 percent of total member bank trust income in the District during 1958 was concentrated at 10 large trust departments, each of which received commissions and fees in excess of $300,000. Seven smaller trust departments, each with commissions and fees of $100,000 to $300,000, received an additional 13 percent of the total. The remainder of trust income, or 17 percent, was received by banks having trust income of less than $100,000 during the year. Within this category, there were nine banks with trust income of $50,000 to $100,000, 25 banks with trust income of $10,000 to $50,000, and 62 banks having trust income of less than $10,000 each. The trust function is relatively less important at commercial banks in the Southwest than in most other sections of the country. Whereas trust departments contributed 5.1 percent of total earnings at member banks in the Nation during 1958, the comparable figure for Eleventh District member banks was only 2.1 percent. Balanced against this low ranking, however, is the fact that bank trust departments in the Southwest are growing at an annual rate which far exceeds the rate of growth established in any other section of the country. In showing the fastest growth rate in the Nation, trust income at member banks in the Eleventh District rose from $1.2 million in 1945 to $8.1 million in 1958, reflecting almost a sixfold increase. In contrast, trust income at member banks in the Nation barely tripled during this period, rising from $1l2.1 million to $364.4 million. In terms of both the number of accounts and the income generated, personal trust services are considerably more important in the Southwest than corporate trust functions. In the course of its survey of 1958 earnings and expenses of commercial bank trust departments, the Federal Reserve Bank of Dallas obtained detailed information from 39 trust departments, which accounted for almost 90 percent of member bank trust income in the District. As of December 31 , 1958, these trust departments had on their books 12,133 personal accounts and 4,701 corporate accounts. Characteristics of District Trust Operations Bank provision of trust services in the Southwest is confined to a relatively small number of banks. Of the 633 member banks in the Eleventh District, only 94 national banks and 19 state member banks are exercising trust powers, although a slightly larger number has received authority to do so. Approximately one-half of the banks exercising trust powers have only a nominal volume of trust activity, and fewer than onehalf have formally organized trust departments . In many cases, the exercise of trust powers by smaller banks represents defensive action taken to protec't a competitive position or to serve one or more valuable customers, rather than efforts to develop the trust function as a profitable operation. An outstanding characteristic of trust operations in the Eleventh District, as in the Nation, is the heavy concentration of trust activity at larger banks in I BUSINESS REVIEW Personal accounts consist very largely of personal trusts, defined to include testamentary trusts, living trusts, guardianships, and committeeships. At the close of 1958, the trust departments represented in the 1958 survey had almost 8,900 such accounts . Personal agencies - consisting of agency and custody accounts, escrow accounts, depositary accounts, and similar accounts - numbered 1,700. Approximately 1,000 estates and 500 pension and profit-Sharing trusts made up the remainder of personal accounts. INCOME OF COMMERCIAL BANK TR u ST DEPARTMENTS, 1958 Eleventh Federa l Reserve District 1958 income distribution' Pe rcentage increase or decrease in commissions and fees ' (Percent of 1958 from 1957 1958 from 1956 19 .4 41 .5 9 .1 1 1.6 -3 .3 8.7 61.2 2.8 20.0 28.7 93 .0 14.4 Total personal accounts ... . • . Corporate trusts... . . . . . . . . . . . Corporate agencies.... . . . . . . . 81 .6 4 .0 14.4 9 .0 2.2 20.9 29.5 6.0 27.1 Total corporate accounts... . . Total income...... . . . . . . . 18.4 100.0 16.5 10.3 22.1 28.0 Typ e of account total income) Estates. . . .. . .. . .. .. .. .. .. . . Personal trusts. . . . . . . . . . . . . . . Pension and proAt-shoring trusts. Personal ag e ncies . . . . . . . . . . . . I Based on commisdons and fees received by 39 trust departments, which accounted for appro ximate ly 90 pe rcent of 1958 trust incom e at all memb e r bonks in the District. !! Based on income changes at 26 tru st de partm e nts which reported in the 1956, 1957 . and 1958 trust surveys. The corporate trust function of southwestern banks consists predominantly of agency services for corporations, but the role of trust departments as trustees for bond, note, and other debenture issues has become increasingly important in recent years. The number of corporate agency accounts - including accounts for which the trust department acts as registrar, transfer agent, coupon- and principal-paying agent, depositary, or dividend-disbursing agent - was 4,116 at the close of 1958. The number of bond, note, and debenture issues for which trust departments served as trustees numbered 585. Recent Developments in Trust Department Income Personal accounts not only are considerably more in1portant than corporate accounts in the southwestern trust picture but also are showing, in terms of 1956-58 income changes, a faster rate of growth. At trust departments which participate regularly in the annual survey of trust department earnings and expenses, the number of personal accounts rose 19.7 percent from 1956 to 1958, and the income from these accounts increased 29.5 percent. During the same period, the number of corporate accounts increased 19.1 percent, and the income from these accounts advanced 22.1 percent. In 1958, however, income from corporate accounts advanced more rapidly than income from personal aCi:counts. By far the fastest growth rate currently is being shown by pension and profit-sharing trusts, including thrift-plan accounts. The number of these trusts advanced 28 percent in 1957 and 16 percent in 1958, and trust department income from such accounts nearly doubled in the 2-year period. Income from other types of accounts registered rates of growth ranging between a 2-year advance of 6 percent for corporate trusts to a gain of 29 percent for personal trusts. Percentage growth in various types of trust income, as well as the percentage distribution of trust department income in 1958, is shown in the preceding table. It will be noticed from this table that corporate accounts provided only 18 percent of trust department income in 1958, whereas personal accounts contributed 82 percent. At smaller trust departments in the District, the percentage contribution of personal accounts is even larger because, in many cases, few if any corporate trust functions are performed. At the District's larger trust departments, on the other hand, income from corporate accounts tends to average around 25 .percent of total income, and in individual DISTRIBUTION OF INCOME FOR COMMERCIAL BANK TRUST DEPARTMENTS, 1958 El eventh Federal Rese rve District (P erce ntoge of total comm iss ions and foes . Dollar amounts i n thou sand s) 39 ban ks with total commissions and fees of: $10-$40 $4 0-$100 $100-$300 Ove r $300 Ite m Totol 13 11 5 10 39 19.8 71.2 24.4 55.9 22.7 59.8 18.3 4 1.6 1 ~ .4 45.6 sha ring trusts •••.. ..• .. Agencies •• • • •• , • • • • • • •• • 2.5 6.5 4.0 15.7 4.4 13.1 10.6 29.5 9.1 25.9 Total income ••••••• •• •• 100.0 100.0 100.0 100.0 100.0 Number of banks Commissions and fees from: Estat os .•••••••••••••• • • Trusts • • . ••. ..•. • . ••• . •• Pension and proflt· NOTE. - Th e rotios are de rive d from oggre gato dollar totals, not av e ra ges of ind ivi dual ban k ratio s. cases it runs considerably higher. As indicated in the table, corporate agencies contribute more than three times the trust department income provided by corporate trusts, and income from agency accounts also is showing a faster rate of growth. Trust Department Expenses On an average basis, trust departments in the District had one full-time employee for each $10,700 of commissions and fees received in 1958 and one trust officer for each $40,000 of commissions and fees . For a number of reasons, these relationships may vary widely from one trust department to another, but the averages themselves serv~ to highlight a significant aspect of trust operations: the dominant importance of salaries and wages as a cost item. At trust departments in most size groups, wage and salary expense ranges between 55 and 65 percent of total trust department expenses. At larger departments, or those with annual commissions and fees in excess of $100,000, the ratio of employees to officers tends to be around 4 to 1, and expenses for employees' wages exceed officers' salaries by a fairly wide margin. At the smaller departments, where the ratio of employees to officers is approximately 2 to 1, officers' salaries comprise the most important expense unit. Percentage distributions of expenses for trust departments represented in the 1958 survey, classified by income size, are shown in the following table. Aside from salary and wage expense, the relative importance of most expense categories is not noticeably different from one size group to another. Recent developments in trust expenses include a steady mounting of operating costs, which have shown a rate of growth approximately equal to the percentage advance in trust income. Virtually all categories of BUSINESS REVIEW I DISTRIBUTION OF EXPENSES AND RELATED ITEMS FOR COMMERCIAL BANK TRUST DEPARTMENTS, 195B Eleventh Federal Reserve District (Percentage of total expenses, Dollar amounts in thousands) 39 banks with total commissions and fees of: Item $10-$40 $40-$100 $100-$300 Over $300 Total 13 11 5 10 39 OIAcers. . • • • • • • • . • • . • Employees. • • • • . . • . . • . 43.4 22.4 Pensions and retirements. . . 3.5 31.6 26.0 3.5 25.7 34.3 4.2 .8 27.7 33.4 3.9 .8 Number 01 bonks Expenses Salaries and wages 1.2 .7 32.4 38.8 2.7 1.0 to salaries......... ... 1.1 Occupancy of quarters. . . . 4.3 Furniture and equipment. . . 2.3 .8 5.3 2.1 1.1 4.3 1.8 2.1 6.0 2.6 1.8 5.7 2.5 1.9 .9 1.8 2.8 1.4 2.7 2.9 .4 1.5 3.6 .8 1.9 3.4 .8 1.9 .8 .5 .5 .4 .6 .5 Personnel insurance. . . . . . . Other expenses related Stationery, supplies, and postage. . . . • • • . • . • • . • Telephone and telegraph.. Advertising. • • . . . • • • • • • • • Directors' and trust committee fees... . . . . . . Legal and professional fees. .S 1.5 1.0 1.1 .9 Periodicals and inye$t~ ment services. . . . . . . . . . Examinations. . . . . . . . . . . . Other direct expenses. . . . . 1.3 .5 2.1 .7 .8 1.1 .3 .9 .4 .4 5.7 .6 .5 4.7 Total direct expenses.. . • Overhead. • • • . • . . •• . • . . 87.1 12.9 83.4 16.6 90.1 9.9 89.4 10.6 88.8 11.2 Total expenses.... •• . • • 100.0 100.0 100.0 100.0 100.0 Related items Average number of officers. Average number of 1.1 2.1 5.2 11.4 4.7 employees. • • • • • . • • . • • 1.4 4.9 18.6 45.5 17.3 NOTE. The ratios ore derived individual bank ratios. from aggregate dollar totals, not overages of expenses have risen, but because of the dominant position of salaries and wages in the costs of trust operations, the key increases have been concentrated in that category. Payments for employees' wages rose approximately 28 percent between 1956 and 1958, and officers' salary payments increased almost 25 percent. Basically, these advances reflect an increase in trust personnel. In most respects, the distribution of expenses incurred in handling personal accounts is not materially different from that involved in handling corporate accounts. An important exception, however, is that employees' salary and wage payments are relatively more significant in the case of corporate accounts, whereas officers' salaries are substantially less important. The basic difference between the costs involved in handling personal and corporate accounts is best illustrated by the fact that, while larger trust departments in the District maintained only one trust officer for each $61,000 of income from corporate accounts in 1958, the average for personal accounts was one trust officer for each $41,000 of income. These departments reported one employee for each $12,500 of income from personal accounts and one employee for each $8,300 of income from corporate accounts. I BUSINESS REVIEW From these statistics, it is clear that the corporate trust function, while requiring the attention of more employees, also requires much less officer supervision as much of the work involved in servicing corporate accounts consists of routine and/or mechanical operations. In contrast, more of the work involved in handling personal accounts must be discharged by officer personnel, since management of these accounts requires the continuing application of detailed knowledge in such fields as investments, taxes, and law. It is primarily for this reason that the corporate trust function is generally more profitable than the personal trust function, particularly because the added costs of handling personal accounts are not always covered by the fees charged. Survey data indicate that, while expenses of handling personal accounts average about 97 percent of the income from these accounts, the costs of handling corporate accounts absorb only about 89 percent of the income from such accounts. The greater profitability of corporate accounts as compared with personal accounts also is indicated by data obtained from nine large trust departments which were able to segregate their 1958 income and expenses by type of account. These data show that the expenses of handling corporate agencies in 1958 amounted to 82.1 percent of income from these accounts and that the costs of handling corporate trusts (mainly bond trusteeships) came to only 72.4 percent of income. In contrast, estates, personal trusts, and pension trusts showed much narrower margins of profit, and the costs of handling personal agencies exceeded the income received from these accounts. In connection with data indicating relative profitability of various types of trust accounts, it should be noted that most large trust departments tend to build for the future, and this tendency frequently results in a build-up of staff and, sometimes, equipment in anticipation of a volume of trust business expected to materialize at some later point in time. Indeed, the success of a trust department in attracting, new business often is contingent upon the existence of unused capacity in the trust department. In the more specialized areas of trust operations, such as pension funds, a trust department cannot expect to attract new businesS until it can demonstrate a capacity for handling these accounts. Thus, the build-up in staff generally must precede the build-up in operating volume. Consequently, isolated statistics do not always reflect the true profitability of individual type.s of trust accounts. For example, the costs of managing pension and profit-sharing trusts at large trust departments in 1957 amounted to almost 132 percent of the income received from these accounts. In that year, many trust departments were expanding their facilities and personnel to handle such accounts, thereby giving rise to the high ratio of expenses to income. In 1958, with the sharp expansion in the volume of pension and profit-sharing trust activities, these accounts showed a small profit. There is a general feeling among trust officers that, as the volume of pension trusts expands further, these accounts will continue to show greater profitability. Trust Department Net Earnings Approximately one-half of the trust departments in the Eleventh District show net losses on their trust operations. These departments tend to be the smaller ones, although the occurrence of net losses is by no means confined to this group. Of the 39 trust departments represented in the 1958 survey of trust department earnings and expenses, fewer than one-third of the trust departments in the $10,000-$40,000 income group reported net profits. Approximately one-half of the departments in the $40,000-$100,000 income group showed profits, and three-fifths of those with income over $100,000 conducted profitable operations. in 1958 received only $10,700 in income per trust officer. At departments in the $40,000-$100,000 and $100,000 - $300,000 income groups, income per trust officer also was appreciably higher at the profitable trust departments. Moreover, in each size group, the profitable departments reported substantially larger income per trust department employee than the departments which experienced net losses on trust operations. In view of the dominance of wages and salaries in the expense distribution of trust departments, the relationships noted above are not surprising. They suggest that either overstaffing relative to the current volume of activity or possibly the absence of laborsaving devices now used in many trust departments may be an important source of loss in trust operations. However, it also should be noted that temporary overstaffing is an almost inevitable cost for a growing trust department. The decision to offer a broader variety of trust services rarely is reflected in an immediate increase in the volume of trust business handled, but it generally does require immediate additions to trust department personnel, particularly officer personnel. The greater profitability 'of operations at the larger departments reflects partially the ability of these departments to attract corporate accounts, which tend to be more profitable. Moreover, many small departments are in an early stage of growth, incurring expenses that will be spread over a broader base as the volume of trust operations expands in future years. These "growing pains" are less noticeable at larger trust departments, where greater flexibility of operations tends to reduce the margin of unused capacity often associated with growth. In this ' connection, it is relevant to point out that a second characteristic shared by unprofitable trust departments in every size group was that the portion of income derived from pension and profit-sharing trusts was substantially larger than at the profitable trust departments in the same size classification. This relationship should not be interpreted to mean that pension trusts necessarily are unprofitable. Rather, since a comparatively large portion of income derived from pension trusts is generally indicative of strong growth efforts by trust departments, the relationship may reflect only the tendency for net losses to be more heavily concentrated at those departments which place greatest emphasis upon growth. Trust departments reporting net losses in 1958 had certain characteristics in common which, while perhaps not indicating the source of loss, shed light on some interesting contrasts between departments reporting, profits and those reporting losses. In all except thelargest size group, those trust departments that showed a profit in 1958 had much higher income per trust officel: than did unprofitable departments of comparable size. For example, the four profitable trust departments in the $10,000-$40,000 income group reported average illcome of $32,400 per trust officer, whHe the nine departments that sustained net losses Profit and loss experiences varied widely at individual- trust departments in 1958, but at the 39 trust departments represented in the 1958 survey, total commissions and fees exceeded expenses by 3.5 percent. A more detailed breakdown of net earnings positions is shown in the table below. In each case, the net earnings figure does not accurately represent the trust department's contribution to the earning power of parent banks, since the statistics do not reflect the role of the trust department in attracting deposits to the parent bank, performing services for the bank without charge, or other aspects of trust operations. BUSINESS REVIEW\ NET EARNINGS AND RElATED ITEMS FOR COMMERCIAL BANK TRUST DEPARTMENTS, 1958 Eleventh Federal Reserve District (eerce ntogo of totol comm iss ion s and fees . Dollar amounts in thousands) 39 bonks with totol commissions and fees of: Item $10-$40 $40-$100 $100-$300 Over $300 Total Numb er of banks 13 11 5 10 39 Totol e xp e nses ••• • •.... • •.• 156.0 100.1 98.3 93.8 96.5 -56.0 8.4 -.1 19.4 +1.7 22 .2 +6.2 8.0 + 3.5 10.6 for d e posit cre dits •..•.. • . - 47.6 + 19.3 + 23.9 +14.2 +14.1 2.0 2.0 2.3 2.2 2.1 3 7 3 4 17 $ 194 $716 $723 $5,603 $7,236 Trust d epartm ent net earning s I + 1 or losses I-I belore inco me tax es • • . • •• • •.••• Allow e d cre dits for d e posits Trust d eportm ent net earning s I + 1 or losses I-I, adjuste d Me morandum flgur es Av erag e r ate allowed a s deposi t credit (pe rcent)'. Number of banks allowing de posit credits •.•.. • . . • Amount of total com- missions and fees •.• • .•• 1 Based on re porte d rotes only; e xclude s bonks which do not allow a credit for de~O~iit _ Th e ratios are de rive d from oggrogote dollar totals, not averages of ind iv idual bonk ratios . Several indications point to the probability that trust operations are destined to become a more important feature of commercial banking in the Southwest. The pace-setting growth rate established by trust departments in this region points in that direction, as does the fact that, relative to the type of economy which southwestern banks serve, the trust function still remains comparatively underdeveloped. These two factors are closely interrelated. Taken together, they suggest that trust departments in the Southwest are making rapid progress in capitalizing upon the enlarged trust potential which has been generated by an expanded regional economy. Moreover, continuation of rapid population and industrial gains will enlarge further the opportunities for an increased volume of trust operations. The continued growth of trust business in the Southwest undoubtedly will invite more careful scrutiny of various aspects of trust operations by bank manage~ ment and stockholders. In connection with one aspect of these operations, the contribution of the trust department to the earning power of the parent bank, a precise measurement can never be obtained. The trust department's role in attracting profitable accounts to other departments of the bank, for example, is not subject to precise measurement. Nevertheless, it is obvious that, in attracting a large personal or corporate account, the trust department also opens the door for the establishment of a deposit relationship which may prove higbly satisfactory to the parent bank. BUSINESS REVIEW 6 For internal purposes, certain accounting refinements may prove useful in assessing the trust department's contribution to the parent bank. The most common, that of allowing the trust department a deposit credit (generally between 2 and 3 percent) for trust funds deposited with the parent bank, has received relatively widespread acceptance in the Southwest. This technique was used by 17 of the 39 District trust departments represented in the 1958 survey, and the dollar amount of deposit credits at these 17 banks amounted to 10.6 percent of total commissions and fees received by all survey trust departments in 1958. As indicated in the opposite table, the allowance of deposit credits at fewer than one-half of the 1958 survey trust departments produced a marked improvement in the adjusted net earnings positions of each size group. Other techniques which may prove useful in analyzing internally the operations of a trust department include the allowance of credits to the trust department for performance of stock transfer and related functions for the parent bank, for services in connection with the bank's pension and profit-sharing plans, and for the extension of preferential rates or extra services to attract new bank customers or to hold established ones. Adjustments for these considerations cast trust operations in a more favorable light, and only when such allowances are made does computation of the profitability of trust operations become most meaningful. LESLIE C. PEACOCK Financial Economist A detailed report of the results of the survey of 1958 earnings and expenses of commercial bank trust departments in the Eleventh Federal Reserve District may be obtained by addressing a request to: Research Department Federal Reserve Bank of Dallas 400 South Akard Street, Dallas 2, Texas BUSINESS REVIEW BUSINESS, AGRICULTURAL, AND FINANCIAL CONDITIONS Strikes caused an unusually sharp decline in nonfarm employment in the Eleventh District states during July and pointed toward further reductions in employment and output during August. Industrial production in Texas decreased again in July, with weakness in petroleum output a major factor in the decline. Seasonally adjusted department store sales in the District declined slightly during July but were well above a year ago. The larger metropolitan areas, where a number of new stores have opened this past year, continue to register the highest year-to-year sales gains. Department store inventory movements, after seasonal adjustment, paralleled the sales pattern, dropping somewhat below the June level and continuing above a year earlier. Construction contract awards in the District states during June showed a strong seasonal rise, although they were below the record high of a year earlier. For the first half of 1959, the value of total awards reflected a year-to-year gain of 8 percent, led by a 3D-percent increase in residential building. Demand for major petroleum products was noticeably weak in the first half of August, although demand for gasoline remained high. Refinery operations were depressed because of strikes and large inventories of finished products, particularly distillate fuel oil. District crude oil production in August was only slightly higher than in July, and no significant increase in production is scheduled during September. Bank credit at the District's weekly reporting member banks increased between mid-July and midAugust as a moderate gain in loans was accompanied by bank purchases of Treasury bills and notes. Reserve positions of District member banks tightened, and borrowings from the Federal Reserve Bank rose further. Sales at department stores in the Eleventh Federal Reserve District during July declined more than seasonally from the record June level but were 8 percent greater than in July 1958. The seasonally adjusted sales index for July was 174 percent of the 1947-49 average, compared with 176 in the preceding month and 162 a year earlier. Sales continued their strong year-to-year gains in early August, showing a 9-percent gain during the first 2 weeks. For the first 7 months of 1959, cumulative sales were 9 percent above ·sales in the same period last year. Most of the maj0r metropolitan areas in the District registered year-to-year increases in sales during July. The larger areas, in which a number of new stores Total crop output in the District this year may approach last year's record. The cotton crop is indicated to be the largest in several years, and grain sorghum production is slightly above a year ago. Pasture and livestock conditions continue to be excellent. have been opened, continued to show the most substantial gains. The accompanying table indicates increases ranging from 1 percent in EI Paso to 13 DEPARTMENT STORE SALES AND STOCKS (Percentage cha ng e In retail value) STOCKS (End of month) NET SALES July 1959 from Are a June 1959 Total Eleventh District. . • • . . . . . . . .. -3 Corpus Christi...... . . .. . . . . . . . ... -7 Dallas.... . .. . .. .. .. .. . .. .... .. . 0 EI Paso ......................... -15 Fort Worth.... .. .. .. .. .. .... .. .. -3 0 Houston. • • • .. . . .. . . . . . . . . .. .. . . San Antonio... . . . . .. . . . . .. . .. . .. -1 Shreveport, l o.. . . . . . . . . . . . . . . . . . - 1 Waco .......... . ............... -2 Other cities.... . . .... . .. .. .. . ... -8 July 1958 7 mos. 1959 camp. with 7 mo •. 1958 8 -3 13 1 7 13 -1 8 12 8 9 3 12 6 9 12 5 8 11 11 Jul y 1959 from June 1959 July 1958 1 -3 3 3 1 -2 5 1 10 - 1 19 5 3 21 0 6 2 -3 3 o BUSINESS REVIEW I INDEXES OF DEPARTMENT STORE SALES AND STOCKS Eleventh Federal Reserve District (1947·49 = 100) SALES (Dally average) Date Unadjusted 1958:July.. ••. ••. . • 1959: May.. •.• .... June..... . ..•• July.......... 144r 172 160 155 Seasonally adjusted 162r 173 176 174 STOCKS (End of month) Unadjusted 155r 174 169 170p Seasonally adjusted 163r 175 181 179p r -Revised. p - Preliminary. percent in both Dallas and Houston. The only areas in which July sales were lower than a year ago were Corpus Christi and San Antonio, with declines of 3 percent and 1 percent, respectively. Reflecting the seasonal pattern expected at this time of the year, sales during July in Dallas and Houston were equal to their respective June totals, but month-to-month decreases occurred in all the other areas. Virtually all of the major departments showed July sales increases over a year earlier at the District stores that report sales by type of goods, but the outstanding gains were 19 percent in sales of women's and misses' dresses and 14 percent in sales of radios, television sets, and musical equipment. Other major lines having sales increases were men's clothing, up 9 percent; women's and misses' accessories, up 6 percent; and furniture and bedding, up 3 percent. One of the few decreases was recorded in sales of major household appliances, which were 12 percent below a year ago. Inventories at the District's department stores during July rose 1 percent from the end of June and were 10 percent higher than in July last year. The seasonally adjusted stock index receded slightly from the record June level to 179 percent of the 1947-49 average but was well above the 163 registered a year ago. Orders outstanding at the end of July fell below those at the end of June, as new orders placed during the month slowed sharply from the month-earlier pace and receipts of goods rose. These movements, while not unusual for this time of the year, may indicate a slackening of the rapid rate of inventory accumulation which has prevailed in the last few months. Harvesting, the culmination of many months of work, is in progress over a major portion of the District. Favorable growing conditions during the past month have resulted in near-record crop prospects, although I BUSINESS REVIEW rain is needed in a few areas. Harvesting of sorghums and cotton has extended into the northern and extreme western sections of the District. In the High Plains area, farmers are busy cultivating and irrigating row crops for the last time this season. Preparation of wheat land for fall planting is active in the plains of New ·Mexico and Texas. Cotton harvesting is making rapid progress in earlier areas and is past the halfway mark in the Lower Valley and Coastal Bend of Texas. Harvesting in the south-central part of the State is about one-fifth complete, and first bales have been ginned in the northern Blacklands. Root rot has reduced yields in many parts of the Blacklands, and boll weevils have damaged cotton in northeastern areas. In the High Plains, the crop is fruiting heavily, and prospects remain quite favorable; in dry-land sections, a general rain is needed. In the Nation the 1959 cotton crop is placed, as of August 1, at 14,815,000 bales, or 29 percent above last year and 5 percent above the 1948-57 average. The cotton crop in the District states is estimated at 6, 755,000 bales, or 13 percent greater than both the 1958 output and the 10-year average. The second highest yields of record have resulted in an indicated Texas cotton crop of 4,750,000 bales. A crop of this size would be 10 percent greater than in 1958 and 20 percent larger than average. Cotton output in all of the crop reporting districts except the Northern High Plains and the lower portion of the Southern Texas Prairies is up from a year earlier; however, production in the Trans-Pecos area is only fractionally above the outturn in 1958. The crop in each of the other District states is estimated to be above output a year ago, with COTTON PRODU CTIO N Texas Cro p Re porting Districts (In thousands of bales - 500 lb. gross wt.) 1959 Indicated August 1 1958 1957 1958 1O·N - South Texas Plains . .......... 10·5 - Lower Rio Grande Valley . •... 500 1,520 300 370 25 530 75 75 290 55 150 165 180 55 460 530 1,502 261 282 19 425 43 54 289 34 99 172 156 47 395 379 1,196 217 263 17 424 70 72 272 21 115 115 156 36 279 94 101 115 131 132 125 174 139 100 162 152 96 115 117 116 Stat •.•...........••.....•..... 4,750 4,308 3,632 110 Crop reporting district I·N 1·5 2.N 2.5 3 4 5·N 5·5 6 7 B·N - Northern Southern Red Bed Red Bed High Plains . •••.•.... High Plains ..... . .... Plains .. '" .••. . ••.. Plains ....... . ...... - Western Cross Timbers .... . . .. - Black and Grand Prairies • .. . . East Texas Timbered Plains ••.• East Texas Timbered Plains . . .. Trans·Pecos •. . .............. Edwards Plateau .. ••.••..... Southern Texas Prairies . ...... 8-S - Southern Toxas Prairies ....... 9 - Coastal Prairies . •........... SOURCe, Unitod Stalo. Department of Agriculturo . 1959 as percent of CROP PRODUCTION Texas and Five Southwestern States (In thousands of bushels)' TEXAS Crop Estimated August I, 1959 4,750 42,928 Wlnt.r wh.at •••• 56,440 Oats . .. .. . . .. . . 24,156 Barl.y . • . .. . . .. 6,884 Ry ....... . .. . . . 135 Rice· ..... . ... .. 13,344 Sorghum grain ... 276,912 Flaxs •• d .. ..... 385 Hay· ........... 2,400 Peanuts' . . .. ••. . 252,800 Irish potatoes' . . • 2,620 1,680 ~:c~o~s~~t.~t~.e.s :.: 27,000 Cotton' . •...... • Corn • . . . . . .. . . . CROP REPORTING DISTRICTS OF TEXAS 1 !! :l FIVE SOUTHWESTERN STATES' 1958 1948· 57 Estimated August 1, 1959 4,308 42,973 73,040 53,130 10,143 338 11,93B 273,066 336 2,487 224,110 2,285 1,210 26,000 3,956 41,073 35,358 24,373 2,206 223 13,013 113,524 753 1,753 193,061 ' 1,513 ' 1,351 35,040 6,755 69,623 150,771 38,617 29,586 1,025 26,028 305,944 455 6,562 384,850 5,839 6,64 3 76,400 Average Ave rag e 1958 1948·57 5,953 70,560 196,780 77,823 35,848 1,679 23, 158 305,047 361 6,773 371,060 5, 192 6.107 60,000 5,962 70,487 103,644 38,987 13,757 853 25,360 13 2, 824 1,023 5,156 297,879 ' 3,5 4 3 ' 6,366 73,180 Arizona, Louisiana, New Mexico, Oklahoma, and Te?Cos. In thou sands of ba les. In thousands of bags containing 100 pounds oach . " In tho usands of tons. In thou sands of pounds. o In thousands of hundredweight. 7 Average, 1949.57. SOURCE , United States Departm ent of Agriculture. fi gains ranging from 9 percent in Arizona to as much as 62 percent in Louisiana. Sorghum harvesting is complete in the early areas of south Texas and is past its peak in northern sections of the State. Some combining of sorghums is under way in parts of the Southern High Plains; late sorghums in the plains are in need of moisture. Output of grain sorghums is estimated at almost 306 million bushels, or slightly more than the record outturn realized in 1958. On the other hand, corn production is indicated to be somewhat below a year earlier. Harvesting of this crop in south and east Texas is expected to get under way when combining of sorghums is completed. Production of peanuts and rice is particularly promising, with outturns placed at 4 percent and 12 percent, respectively, above last year's crops. About one-fourth of the south Texas peanut crop has been harvested; but in the important Cross Timbers area, late peanuts are in need of rain. Harvest of the remaining summer vegetable cropsmainly onions, potatoes, and melons- continues fairly active. Most of the early potatoes have been harvested, and the bulk of the onions still to be gathered is of the Spanish type. Cantaloupes are moving in volume from the Trans-Pecos area. Watermelon harvest in east Texas is about over, but in the northwestern part of the State, abundant supplies are still available. The 1959 crops of Irish potatoes and sweet potatoes are moderately larger than a year earlier. The generally dry, open weather during the past month cured grass rapidly in western parts of the Dis- trict. Forage conditions still remain quite favorable in most sections except the Trans-Pecos area and in parts of Arizona and New Mexico. The abundant grass and fairly moderate temperatures have encouraged cattle to gain rapidly, and most livestock will be marketed at fairly heavy weights this fall. Gross loans (excluding interbank loans) at weekly reporting member banks in the District increased a modest $9.3 million during the 5 weeks ended August 19, compared with a gain of $52.0 million during the corresponding period of 1958. Consumer-type loans and agricultural loans registered the largest advances during the 5-week period; however, they were partially offset by declines in real-estate loans and securities loans. There was relatively little change in business loans as strength in the petroleum category was countered by decreases in the borrowings of trade, construction, and metals firms . A small net gain in loans to nonbank financial institutions was recorded. Weekly reporting banks in the District increased their investment accounts by $14.5 million during the 5 weeks, reflecting principally the purchase of Treasury bills and notes and the maturing of Treasury certificates associated with the Treasury's recent refunding and cash financing operations. The banks reduced their holdings of non-Government securities. Although total deposits at the reporting banks declined moderately between July 15 and August 19, BUSINESS REVIEW I CONDITION STATISTICS OF WEEKLY REPORTING MEMBER BANKS IN LEADING CITIES Eleventh federal Reserve District (In thousands of dollars) Item Aug. 19, 1959 July 15, 1959 Aug. 20, 1958 ASSETS Commercial and industrial loans ••••.•.•..•..• $1,503,709 $ 1,501,009 $ Agricultural loons ••••••••• •••••••• • ••••••• • 40,545 32,178 36,540 768 15,353 845} 15,249 24,068 7,611 183,713 9,990 } 185,647 184,398 Sales flnance, personal flnance, etc .•••...• .• Sayings banks, mtge. cos., ins. cos., etc ••• •. •• loans to foreign banks •••.•••.•••..••....•. Loans to dom estic commercial banks ••••....••. Re al·estate loans ••••.••.••••...•••..••••.• All other loans . .. •.•••• • ••... . ••. . •• .•..• • 129,849 115,655 34 22,588 213,406 7 18,409 137,039 107,258 34} 19,817 222,410 707,864 Gross loans ••••...••.•••••••• • •.•••.•.• Less reserves and unallocate d charge·offs •• 2,951,640 50,763 2,939,520 50,721 2,733,918 45,729 loans to brokers and d ea lers for purcha sing or carrying : U. S. Government sec urities •••..•..•....... Other securities ••• •.•..•.• •.••. • . .•. ••.• Other loans for purcha sing or carrying: U. S. Governm e nt securities • ••.. •..•.••.•.• Other securities ••..•.• •••• . • . . •.•••.•••• positions of both reserve city banks and country banks tightened. Average required reserves rose $5.9 million, and average borrowings from the Federal Reserve Bank increased from $42.4 million in June to $47.8 million in July. Free reserves declined at country banks, and net borrowed reserves increased at reserve city banks. Earning assets of the Federal Reserve Bank of Dallas rose moderately during the 5 weeks ended August 19, as discounts for member banks and holdings of Loans to nonbank flnancial institutions: 52,232 224,133 Net loans .•..••.•••••.•.••••••.••.•.•.• 2,900,877 2,888,799 2,688,189 Treasury bills ..••• • •.•.•••.•..••• •.••• . • .• Treasury ce rtificates of indebtedness • •• •.•• ••• Treasury notes and U. S. Gove rnment bonds, including guaranteed obligations, maturing: Within 1 year ••• . •• ••.••.• ••••.•• .••.•• After 1 but within 5 years ••••.•..••••..•• After 5 years •••••••• •.••• •• . • • •••• •...• Other securities •••••••..•.• •.•.• •• ••.• • .•. 147,743 47,698 102,674 80,749 84,307 233,772 52,593 842,873 301,725 335,466 46,172 } 840,908 1,216,494 300,767 342,367 311 ,255 Total investments ••.•••••••••••.••••••.•• 1,728,098 1,713,637 1,845,828 Cash ite ms in process of collection ••••••.••••• Balances with banks in the United States ••••••• Balances with banks In foreign countries •••••• • Currency and coin •• •.• •••• •• . •••.••• •••••• Reserves with federal Reserve Bank ••••••.•••• Other assets ••••.• •. • •.•••••• •. ••.• . • • ..• • 500,644 487,408 1,610 50,383 537,964 162,320 501,517 459,307 1,639 50,484 564,555 166,025 394,559 494,530 1,319 49,030 571,803 154,208 TOTAL ASSETS ........••..•... ......• 6,369,304 6,345,963 6,199,466 Banks in fo re ign countries •.•.•..•.••••.•.• CertiAed and officers' checks, etc . • • ••. •. . • • 2,937,955 250,177 190,516 938,728 19,811 64,827 2,935,864 193,192 220,277 941,289 18,052 61,752 2,838,928 176,687 170,506 1,050,190 21,084 74,039 Total demand deposits .•.•.. ... .. . • .... 4,402,014 4,370,426 4,331,434 Time deposits Individuals, partnerships, and corporations •••• United States Government •• • ••••• ••••••• •• Postal savings ••••••.•••••••••••.••.•••• States and political subdivisions •••..•.••.•. Banks in th e U. S. and foreig n countries •••..• 1,068,379 7,035 421 173,4 30 2,873 1,089,261 7,045 421 192,288 2,860 1,069,971 7,455 421 221,668 1,903 -5,632,852 LIABILITIES AND CAPITAL ACCOUNTS Demand de posits Individuals, partnerships, and corporations •••• Unite d States Government ••••••••••.•.••. States and political subdivisions •..•.•...... Banks in the United States ................. Total time de posits .................... 1,252,138 1,291,875 Total deposits .........•............ Capital accounts •••• . •••.•.•. •••.• .••...•• 5,654,152 119,606 60,513 535,033 5,662,301 97,050 57,500 529,112 TOTAL LIABILITIES AND CAPITAL ACCOUNTS 6,369,304 6,345,963 Bills payable, re discounts, etc . ...• • .•.•..•.•• All other liabilities ... ... . ..•. . ..... . . . . ..•• 1,301,418 14,000 61,134 491,480 6,199,466 NOTE .-Effective July 1, 1959, this sories was revised. The revised form includes seve ral new items, the most important of which is loans to financial institutions, previ . ously reported against othe r loan categories. Comparable year·earller figurel for the new items will be shown when they become available. there was a sizable shift in balances from time deposits to demand deposits. Decreases in the time accounts of individuals, business firms, and state and local governments were more than offset by a large increase in demand deposits of the United States Government. Although average reserve balances of District member banks recorded a modest gain in July, the reserve BUSINESS REVIEW 10 NEW MEMBER BANK The Medical Center National Bank, Houston, Texas, a newly organized institution located in the territory served by the Houston Branch of the Federal Reserve Bank of Dallas, opened for business August 12, 1959, as a member of the Federal Reserve System. The new member bank has capital of $400,000, surplus of $400,000, and undivided profits of $200,000. The officers are : W. N. Blanton, Chairman of the Board; 1<. S. (Bud) Adams, Vice Chairman of the Board; George Traylor, President; and Thomas E. Walden, Vice President and Cashier. NEW PAR BANKS The Texarkana Oaklawn Bank, Texarkana, Texas, an insured, nonmember bank located in the territory served by the Head Office of the Federal Reserve Bank of Dallas, was added to the Par List on its opening date, July 29, 1959. The officers are: J. C. Cabe, President; Kenneth K. Martin, Vice President and Cashier; and P. A. Turner, Jr., Assistant Cashier. The lamar State Bank, Beaumont, Texas, an insured, nonmember bank located in the territory served by the Houston Branch of the Federal Reserve Bank of Dallas, was added to the Par list on its opening date, August 8, 1959. The officers are: L. Paul Tullos, Sr., President, and Richard M. Cobb, Vice President and Cashier. The Meyerland State Bank, Houston, Texas, a nonmember bank located in the territory served by the Houston Branch of the Federal Reserve Bank of Dallas was added to the Par List on its opening date, August 15, 1959. The officers are: W. J. Keitt, President; W. R. Byers, Executive Vice President; and Bernard S'. Beaman, Jr., Cashier. The North Austin State Bank, Austin, Texas, an insured, nonmember bank located in the territory served by the San Antonio Branch of the Federal Reserve Bank of Dallas, was added to the Par List on its opening date, August 27, 1959. The officers are: Tom l. Mitchell, President; Harry Peterson, Vice President (inactive); R. E. Crain, Cashier; Gene Harrison, Assistant Cashier; and Jay H. Brown, Assistant Cashier (inactive) . RESERVE POSITIONS OF MEMBER BANKS Eleventh Federal Reserve District IAv.rages of doily flgures . In thousands of dollors) Item July 1959 1959 July 1958 $549,242 543,855 5,3B7 37,699 -32,312 $545,670 539,486 6,1 B4 32,879 -26,695 $556,469 543,63 1 12,838 300 12,538 447,624 407,525 40,990 10,054 30,045 448,330 405,964 42,366 9,532 32,834 430,508 378,562 51,946 1,448 50,498 996,866 951,380 45,486 47,753 -2,267 994,000 945,450 48,550 42,4 11 6,139 986,977 922,193 64,784 1,748 63,036 June RESERVE CITY BANKS Re serve balance s. . . . .... . ........ Required reserves . .... .. ...... • . . Excess reserves . ..... . ........... Borrowing s• . .. . . . . . . . . . . . . . . . ••• Free reserves • • . .. .. ... ... .. . • .•. COUNTRY BANKS Reservo balances .... . .. . .. . ..... . Requi red reserves . ............ . . . Excess reserves . . ......... . .. . . . . Borrowings •. ...... • ..•....... • . . Free re serVes • .. • .. • ....•.. . ..... MEMBER BANKS Res 3rve ba lances .••. ...... . •..... Re quired roserves • •..•.•.....••. . Excess reserves . ....... . .. . ...... Borrowings • ........ • ...........• Free reserves . . .. . . . ..•... . ... • .. CO NDITI O N OF THE FE DERAL RESERVE BANK OF DALLAS lin thousands of dol lars) Item Total gold certificate reserves ... •. .......... Discounts for member banks . ...........•... Other discounts and advances . ..•......... . U. S. Government securiti es... ............. . To tal earning assets •.••. .......... . ....... Member ba nk reserve deposits . ........... . Federa l Reserve notes in actual circula tion •.•. . August 19, 1959 July 15, 1959 August 20, $ 672,604 34,110 $ 695,444 24,955 884 1,053,050 1,07B,889 943,463 787,54 1 $765, 132 1,000 o 1,057,452 1,091,562 926,778 791,746 1958 o 99 1,523 992,523 965,139 743,027 Government securities rose $9.2 million and $4.4 million, respectively. Gold certificate reserves again declined. The Bank's Federal Reserve notes in actual circulation increased $4.2 million and, on August 19, were 6.2 percent higher than the level on August 20, 1958. In accordance with the Treasury's current plan to raise $1. 7 billion of new funds, an additional $1. 0 billion of the March 22, 1960, Tax Anticipation bills was auctioned on August 13. The Treasury is increasing its weekly bill offerings to obtain the other $700 million. Demand for major petroleum products in July and the first part of August declined slightly to a level about equal to a year earlier, Demand for both distillate and residual fuel oils was particularly weak and averaged from 8 to 10 percent lower than a year ago. These contraseasonal declines in demand were occasioned largely by lagging summer refills and the steel strike. Demand for gasoline, which has been strong all summer, was seasonally steady in the 5 weeks ended August 13 but was over 4 percent higher than a year earlier. Widespread refinery strikes held national crude oil runs to stills steady in tlle first half of August at a level only 1 percent greater than in August 1958. However, strikes at several major refineries were settled by the middle of August. District refinery operations, which advanced slightly to 2,180,000 barrels daily during early August, averaged 1 percent less than a year ago, and a large Texas City refinery remained strike-bound through the middle of August. As a result of relatively low production and seasonally high demand, gasoline stocks decreased during the first half of August, and both wholesale and retail prices advanced in most major markets, In contrast, stocks of kerosene and distillate fuel oils rose more than seasonally during the first part of the month. On August 14, stocks of distillate fuel oil were 16 percent greater than a year earlier, and prices were notably weak. Despite depressed demand because of the steel strike, stocks of residual fuel oil have not become burdensome, and prices have remained surprisingly strong. Total stocks of the four major refined products amounted to 416,009,000 barrels on August 14, compared with 398,437,000 barrels a year ago. Stocks of crude oil declined 1 percent during the first part of August but were 5 percent more than a year ago. Nevertheless, at 261,462,000 barrels on August 8, crude oil stocks did not appear to be burdensome. Imports of crude oil decreased sharply in the 5 weeks ended August 15 and were 2 percent lower than a year earlier; imports of refined products declined 9 percent to a level 17 percent below a year ago, Total imports averaged 1,324,060 barrels daily dming the 5 weeks ended August 14. Crude oil production in the United States was steady during the first half of August but was 2 percent less than in August 1958. District crude oil production, averaging 2,815,000 barrels daily, declined 2 percent from July. With Texas allowables limited to 9 days, District crude oil production in the first part of August was 9 percent lower than a year earlier. Texas NATURAL GAS : MARKETED PRODUCTION (In millions of cubic f.et) First quart er Fourth quart e r 1959 1958 Area First quarter 195B Te xas . .. . .......• . . . ....... . . . .. . 643,400 187,400 177,700 1,416,400 591,200 193,400 186,000 1,410,400 568,100 206,200 186,300 1,379,700 Tota l................ . ....... .. . 2,424,900 2,381,000 2,340,300 l ouisiana . .... . .... . .. ..... ...... . New M exico . .. . .. ... . • . . .. ....• .. . Oklahoma ... . .. . ... . • .. . . . ... . ... SOURCE , United States Bureau of Mine s. BUSINESS REVIEWI 11 I production in September is scheduled to average about 2,730,215 barrels daily with the continuation of 9 allowable producing days. Production allow abies in southeastern New Mexico during September will be 1 percent lower than in August, and allowables in both Louisiana and Oklahoma will remain at the August levels. July employment of nonfarm workers in the District states was down 17,000 from June to 4,283,100. The principal factors in the decline were a seasonal decrease in school employment and a continuation of the construction strike in Arizona, which reduced construction employment in that State by another 8.500 workers and caused additional layoffs in related industries. The approximately 4,000 workers idled in the District states by the national steel strike on July 15 were counted as employed during July. NONAGRICULTURAL EMPLOYMENT Five Southwestern States 1 Pe rcent change July 1959 from Numbe r of p ersons Typ e of e mploy ment Jul y 1959. Totcl nonagricultural wage and sala ry workers •• M anufactu ring • . . . . .... . . 4,283,100 779,900 Nonmanufo cturing ...... . . 3,503,200 Mining . • . . .. . .... . .. . 258,300 319,300 Construction • .. • . • . .• .• 1959 July 1958r 1959 Jul y 1958 4,300,100 783,400 3,516,700 258,400 322,700 4,209,100 757,200 3,451,900 253,000 311,400 -0.4 - .4 - .4 .0 - 1.1 1.8 3.0 1.5 2.1 2.5 397,800 1,042,000 191,800 507,700 796,300 401,100 1,027,900 187,800 498,300 772,400 .5 .2 .6 .2 -2.1 - .4 1.6 2.7 2.1 1.0 June June Transportation and public utiliti es .. .. . . .. 399,600 Trad e .. . . . . .. . . . . . .. . 1,044,300 Finance ••• .. • .. • .• • .•. 192,900 508,900 Service • . . ... . .. ... ... Governm ent • . .. . . . . .. . 779,900 1 Ar izona, 'Louisiana, Ne w Me xico, Oklahoma, and Te xas. e - Estimated . r- Rev ised. SOURCES , State employme nt age ncies. Federal Reserve Bank of Dallas. Although the employment total in July remained nearly 2 percent higher than a year earlier, the seasonal gain thus far in 1959 has been smaller than normal- even without counting the loss from strikes of some 14,000 construction workers during the past 2 months. From January to July, nonfarm employment in the Southwest rose 58,500, compared with an average increase of 110,275 in the same periods of the preceding 4 years. Except for notable strength in manufacturing employment, the slower pace has been fairly general throughout the different industries and states. The August employment estimates for the region will be depressed further by strikes, since the idle steel- I BUSINESS REVIEW INDUSTRIAL PRODUCTION (Sea sonally adjustod Indexes, 1947·49 Ar ea and typ e of ind ex July 1959p 1959 May 1959 Ju ly 1958 170 209 247 191 132 171 209 250 190 135 175 210 245 194r 142 158r 193r 218r 181r 125r 153 157 169 146 119 155 158 172 145 125 153 156 169 144 126 134 136 141 132 116 TEXAS Total Industrial p roduction . •. . Total manufactures .. ..•. . ... Durabl e manufactures • .• . • .. Nondurabl e manufactures .. .. Mlnorals ... .. ... . ... ..... . UNITED STATES Total industrial production .. •• Total manufactures . •.. • . . .. Durabl e manufactures ... . • .. Nondurabl e manufactures . • . . Minerals...... .. . . .... .. . . p r - = 100) June Pre liminary . Re vi le d. SOURCES, Boord of Gove rno rs of the Federal Rese rve Sys te m. Federal Reserve Bank of Dallas. workers will not be counted as employed in August. Strikes affecting several thousand copper workers in the District states began during mid-August, but this loss probably will not be reflected in the month's employment estimate. Unemployment in Texas registered a seasonal improvement during July, decreasing 9,100 workers to a level of 160,800, which is 4.4 percent of the civilian labor force. New and continuing claims for unemployment compensation in the State declined moderately from mid-July to mid-August. Industrial production weakened further in Texas during July, and the seasonally adjusted index declined to 170, compared with 171 in June and the record 175 in May. The cutback in petroleum output was again the major factor accounting for the decline, and total minerals production was down 2 percent after seasonal adjustment. The influence of the steel strike was not reflected in the July figures, but durable goods production weakened generally. Nondurables output rose slightly. Compared with a year earlier, total industrial production was up 8 percent. Electric power production in the region showed year-to-year gains of about 9 percent during both July and the first half of August. New military orders to District manufacturers include $10 million to a Dallas aircraft firm, but these orders will not provide any significant increases in employment or production in the near future. Furthermore, the Air Force has reduced its orders for a bomber manufactured at a Fort Worth plant by 20 percent during the current fiscal year. The value of construction contract awards in the District states showed a strong seasonal rise of 29 percent from May to June, although the June .level was 16 percent below the record high of June 1958. Residential awards continued to register a year-to-year gain, while "all other" construction was down 28 percent from the year-earlier peak. Cumulative awards during the first 6 months of 1959 reflected a gain of 8 percent, with residential awards up 30 percent and "all other" awards down 6 percent. Despite the yearto-year gain in the cumulative total, the trends since January 1959 for both residential and "all other" awards have shown less seasonal expansion than in recent years. The Texas Contractor reports that the value of nonresidential awards in the State during July was down 3 percent from June and 34 percent from the recordbreaking level of July 1958. Major projects awarded during July include a $14 million electric generating plant at Pearsall, Texas, and a $10 million bank and office building in Fort Worth. Proposed projects recently announced for the District include a $43.5 million copper mine and mill in Pima County, Arizona; a $32 million, 44-story office building for Houston; a $14 million cement plant at Midlothian, Texas; and a new polyethylene chemical plant to be built in the Texas gulf coast area. PERSONAL INCOME, 1958 AND 1957 Five Southwestern States and United States TOTAL INCOME PER CAPITA INCOME Dollar amount (In millions) Area 1958 Dollar amount Perc ent 1957 Percent Increase 1958 1957 change Arizona ...... . .. . 2,20~ louisiana . .. . . .. . . New Mexico ....... Oklahoma .•• •• •.• Texas . .... ... . .. . 4,901 1,548 3,975 17,007 2,019 4,854 1,398 3,734 16,436 9 1 11 7 4 1,932 1,576 1,838 1,740 1,814 1,873 1,583 1,720 1,654 1,791 °75 Total . ••. . ••..• • 29,634 28,441 4 1,769 1,735 2 United States • • 356,328 347,911 2 2,057 2,043 3 1 Continental SOURCE , United States Deportment of Commerce. Personal income in the District states totaled $29,634 million during 1958, according to recently released estimates by the United States Department of Commerce. This figure reflects an increase of 4 percent over 1957, compared with a national gain of only 2 percent. Per capita income in the region ranged from $1,576 in Louisiana to $1,932 in Arizona, compared with a national level of $2,057, and the average growth of 2 percent was about double the national rate. Other reports indicate still greater gains for the Southwest during the first half of 1959 . . ELEVENTH FEDERAL RESERVE DISTRICT ~ Dalla l Head Office Terrilory IDII1l HOU l ton Bronch Territory 1::::::;:):1 Son Anlonio Branch Territory ~ EI Puo Bronch Territory BUSINESS REVIEW I CONDITION STATISTICS OF ALL MEMBER BANKS BANK DEBITS, END-OF-MONTH DEPOSITS AND ANNUAL RATE OF TURNOVER OF DEPOSITS Eleve nth Federal Reserve District (Dollar amounts in thousands) (1n millions of dollars) Debits to demond Demand deposits I d e posit accounts I Percentage change from Jul y 1959 Area Annual rate of turnOVer July 1959 1958 Jul y 31, 1959 Jun e ARIZONA Tucson .•••.••••..••• $ 229,535 LOUISIANA 83,194 Monroe ••••••••••••• 9 Shreveport •...••••.• 314,998 1 NEW MEXICO 39,643 Roswell ............. 6 TEXAS Abilene ••••••••••••• 102,370 3 239,545 Amarillo •• ••••• • •••• 7 Austin •.••..•..•..•• 211,324 7 163,368 3 Beaumont • •••• • ••• •• Corpus Christi ••••.... 202,832 9 15,847 -1 Corsi cana ••.••.•.. " Dallas ....... • . .... 2,654,078 -1 330,330 1 EI Paso .•........... 839,624 Fort Worth ....... . .. 1 9 2,293 5 Galveston ••••...•..• 2,594,436 -1 Houston •••• • •••• ••• 27,350 1 laredo ......•...... 178,490 - 1 Lubbock ............ 68,180 10 Port Arthur ... ... . .. . 59,846 Son Angelo ..•...... 7 648,983 2 San Antonio .•..••... 23,014 5 Texarkana :!: •••• ••••• 91,521 -2 Tyler ....... ........ 111,717 Waco •••••••••••••• 2 129,260 4 Wichita Falls ••...... Total-24 citi.s .......• $9,451,778 July 29, 1959 Item Jul y Jun e Jul y 1959 1959 1958 23 $ 126,768 21.4 21.1 20.8 14 14 52,263 195,668 17.5 19.2 16.4 19.1 17.8 18.4 19 28,479 15.8 14.3 14.5 21 26 17 13 5 2 18 13 14 0 13 3 21 -2 22 15 18 14 14 26 63,556 118,102 160,394 98,764 113,091 20,527 1,132,681 163,929 368,156 62,747 1,250,964 22,169 105,904 43,299 45,267 394,733 15,650 60,118 65,877 103,999 19.1 23.8 16.1 19.4 21.6 9.4 28.0 24.5 27.0 17.3 24.8 14.6 19.9 18.7 15.7 19.7 17.6 18.1 19.8 14.6 18.4 22.7 15.4 18.5 20.3 9.5 28.4 24.5 26.4 16.2 25.3 14.5 19.9 17.0 14.6 19.2 16.6 18.4 19.1 14.3 17.0 19.7 16.7 16.4 21.1 8.3 25.7 23.3 23.8 16.3 23.2 14.4 17.5 18.0 14.0 17.9 14.3 15.4 17.8 11.4 15 $4,813,105 23.4 23.4 21.5 Deposits of individuals, partnerships, and corporations and of states and political subdivisions. !l These flgures include only one bank in Texarkana, Texa s. Tatal debits for all banks in Texarkana, Te xas -A,kan sa s, including one bonk located in the Eighth Dist rict, amounted ASSETS $ 4,746 2,532 821 930 144 890 3 464 282 $ 4,685 2,541 823 935 143 995 2 544 254 $ 4,311 2,581 744 954 133 1,089 1 424 239 TOTAL ASSETse ........ . ......... . .. 10,812 10,922 10,476 Demand d e posits of banks •..•..•..••..•. Other d e mand d e posits .••••..•..••••..• , Tim e d eposi ts ••.•••.•..••..•.•••••..••• 991 6,561 2,132 1,081 6,553 2,180 1,160 6,290 2,087 Total d e posits • ..... •..•. .• .....• •. • . Borrowings e •............•....•...•.•.• Other liabilitiese ..•••.................• Total capital accountse .......•.. ...• ..•. 9,684 135 83 910 9,814 113 91 904 9,537 14 80 845 TOTAL LIABIlITIES AND CAPITALe ... . .. 10,812 10,922 10,476 LIABILITIES AND CAPITAL e - Estimated. BUILDING PERMITS VALUATION (Dollor amounts in thousands) Percentago change July 1959 Area 1959 Area and type 1959 1958 1959 1958 FIVE SOUTHWESTERN STATES' .......... $ 412,417 $ 319,969 $ 493,038 $ 2,110,607 $ 1,953,736 165,163 Residential .......• 160,520 142,161 99 2,338 764,433 251,897 154,806 350,877 1,118,269 1,189,303 All other .......... 3,819,582 18,875,544 16,788,625 UNITED STATES . . . ... 3,659,017 3,528,051 1,674,100 1,364,231 8,884,451 6,504,707 Residential. ••••. .• 1,761,621 9,991,093 10,283,918 All other .......... 1,897,396 1,853,951 2,455,351 1 Arizona, Louisiana, New Mexico, Oklahoma, and Te xas. 7 mos. 1959 July compo with 1959 1958 7 mos. 1958 4,584 $ 5,933 $ 21,638 22 239 116 3,267 2,862 17,398 12 -23 7 211 301 312 376 91 2,381 613 874 104 1,541 463 183 1,723 226 175 1,705 2,143 2,270 2,604 612 16,068 4,269 5,909 809 11,004 2,522 1,369 10,621 1,571 1,235 3,709 2,700 3,871 3,518 4,828 18,222 5,871 12,028 208 20,137 6,370 718 6,695 1,197 1,045 18,660 22,716 33,974 12,581 14,244 109,555 36,172 37,765 1,927 128,415 38,868 6,467 38,737 10,733 10,117 15 -19 -39 70 325 52 9 123 - 16 13 7 -70 29 7 -66 81 23 - 17 23 58 -27 -3 85 - 26 -3 61 55 30 -64 138 66 43 16 22 -9 18 -1 22 -20 -2 71 -16 8 14 150 Totol-17 cities .. 10,853 72,562 $99,912 $559,967 22 8 16 TEXAS Abilene •.••... Ama rillo •.••.• Austin .•....•• Be aumont •.... Corpus Christi .• Dallos ..... . .. EI Paso ....... Fort Worth . ... Galveston •••.• Hou ston ..••.. Lubbock . ..... Port Arthur •• .. San Antonio ••. Waco ••• ....• Wichita Falls .. SOURCE , F. W. Dodge Corporotion . 1959 June 774 Shreveport •••• Jun e 7 mos. 505 Tucson •••.. • . • Janua ry- Jun e May 1959 July 1959 7 mos. LOUISIANA (1n thousands of dolla rs ) June from NUMBER July 1959 ARIZONA VALUE OF CONSTRUCTION CONTRACTS AWARDED July 30, 1958 loans and discounts ••..•.........•...•.. Unite d States Government obligations ...•.. Other secu rities .•. .... •..•..• .....• •• .. Re serves with Federal Reserve Bank ••••.•.. Cash in vault e ... ..... . . ......•.. •...•. Balances with bon ks in th e Unit e d States •... Balances with banks in foreign countries e .... Cosh ite ms in process of collection .••..••.. Other osse ts e ••••••.•.. ••..••.•.. •••.. • 1 to $53,195,000 for the month of July 1959. 1959 June 24, --- CRUDE OIL: DAILY AVERAGE PRODUCTION (In thousands of barrels ) Change from Area elEVENTH DiSTRiCT •• ••• . . .. Texas ••. • .•...••••• •.•• Gulf Coost •........... West Te xas • ••.• ...• •• East Texas (proper) ..... Ponhandle .. . .... ... .. Rest of State .......... Southeastern New Mexico •• Northern Louisiana ••• •••. . OUTSIDE ELEVENTH DISTRICT. UNITED STATES ............ July 1959' 1959' I Jul y 1958' 1959 2,857.5 2,484.0 462.8 1,094.2 128.7 106.9 691.4 258.2 115.3 3,981.4 6,839.0 3,016.1 2,645.4 502 .3 1,178.2 141.2 106.9 716.9 255.0 115.6 3,989.9 7,006.0 2,791.0 2,418.8 457.5 1,043 .9 129.7 104.5 683.2 254.2 117.9 3,780.1 6,571.0 -158.6 - 161.4 -3 9.5 -84 .0 - 12.5 .0 -25.5 3.2 -.3 -8.5 - 167.0 Jun e Jun e GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS Eleventh Federal Reserve District Jul y 1958 66.5 65.2 5.3 50.3 -1.0 2.4 8.2 4.0 -2.6 201. 3 268.0 (Averages of dally flgures. In millions of dollors) GROSS DEMAND DEPOSITS Totol city banks banks Total Reserve city banks Country banks 1957, July ...... 1958, Jul y ...... 1959, Morch .•.. April. .... Moy ..... $7,415 7,539 7,794 7,800 7,674 7,678 7,662 $3,680 3,760 3,827 3,797 3,751 3,771 3,760 $3,735 3,779 3,967 4,003 3,923 3,907 3,902 $1,619 2,077 2,129 2,151 2,156 2,177 2,159 $ 871 1,141 1,119 1,133 1,125 1,135 1,122 $ 748 936 1,010 1,018 1,031 1,042 1,037 Jun e ••••• SOURCES: 1 2 Estimated from American Pe trol e um Institute weekly re ports. Un ited Stotes Bureau of Mines. BUSINESS REVIEW 14 TIME DEPOSITS Date July ...... Reserve Country
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